Elon Musk's SpaceX has just announced a $17 billion deal to buy back a wireless frequency license from EchoStar, a move that is seen as a strategy to expand the Starlink satellite network and enter deeper into the 5G connection market, according to IndianExpress.
Under the deal, SpaceX will spend a maximum of $8.5 billion in cash, issue $8.5 billion in stocks and bear an additional $2 billion in debt to EchoStar.
In return, the company will own an exclusive mobile frequency spectrum, allowing the deployment of a new generation Starlink Direct to Cell satellite with an upgraded laser connection, increasing the capacity of the mobile network by more than 100 times compared to the present.
Gwynne Shotwell, Chairman and CEO of SpaceX, said the deal would help the company eliminate mobile deadlines worldwide and provide widespread coverage to customers.
At the same time, EchoStar and SpaceX also signed a cooperation allowing Boost Mobile users to directly access Starlink services, expanding coverage to areas without telecommunications infrastructure.
This information immediately had an impact on the market, as EchoStar shares increased by 19% while AT&T, T-Mobile and Verizon stocks all decreased.
The context of deals became even more remarkable as demand for mobile data in the US skyrocketed, reaching a record 132 trillion megabyte in 2024, according to CTIA.
Since 2020, SpaceX has launched more than 8,000 Starlink satellites, of which about 600 are specialized for direct mobile connectivity. The future deployment of a larger satellite will depend heavily on the Starship, a new-generation super missile expected to be used for the first Starlink mission early next year.
As for EchoStar, the company will continue to maintain Dish TV, Sling, HughesNet and Boost Mobile services after selling frequency.
The transaction is also expected to help EchoStar address questions from the Federal Communications Commission (FCC) regarding the slow implementation of 5G.
The FCC representative appreciated the deal, considering it an opportunity to promote competition and expand creative services to millions of Americans.
The SpaceX - EchoStar deal not only strengthens Starlink's position in the global telecommunications industry but also signals more fierce competition in the race for 5G coverage and new generation connectivity services.
